Alaska Airlines launches new venture arm, with first investment in UP.Partners’ $230M fund – TechCrunch

Alaska Airlines has become the latest major airline to enter corporate investing with the launch of a new venture capital arm, dubbed Alaska Star Ventures, as the aviation industry looks to emerging technologies to help decarbonize air travel.

Alaska Star Ventures’ first investment, to the tune of $15 million, is in Los Angeles-based UP.Partners’ inaugural venture fund. The $230 million early-stage fund will focus on mobility technologies and has garnered additional investment from Woven Capital, the investment arm of Toyota Motor’s Woven Planet Group; Standard Industries; Hillwood; and OSM Maritime.

The airline also said that it would work with UP.Partners on its inaugural investments. While Alaska Star Ventures may consider additional sector-focused fund investments, most of the focus will be on investing in discrete technologies, Alaska Airlines’ VP of public affairs and sustainability Diana Birkett Rakow told TechCrunch in a recent interview.

Alaska Airlines’ intent is to invest in emerging tech that can help it hit its target of reaching net-zero carbon emissions by 2040. The company also set a nearer-term objective of being the most fuel-efficient airline by 2025 and cutting ground services emissions in half by the same year. Alaska Airlines announced the non-binding targets in April, when it joined a slew of other businesses in joining Amazon’s Climate Pledge.

“When we looked at, what’s our execution plan for that path [to net-zero], we started to realize that there were a lot of areas where technology was essential for us to hit our goals,” she said. “So we decided to set up this investment vehicle to really be a catalyst for finding and accelerating and advancing technologies that help us accelerate that path to net-zero.”

While investments in clean tech are growing, Birkett Rakow said that the move to establish a fund would help the airline identify technologies that are “truly applicable” to the operating environment and could be deployed in the next three to 10 years.

Alaska Airlines chose to contribute to UP.Partners’ first fund because of the deep background and expertise of its two founders, Ben Marcus and Cyrus Sigari, Birkett Rakow explained. The two founded jet sales services company jetAVIVA in 2006, and AirMap in 2014, a traffic management system for unmanned aircraft.

She added that the airline will get a front-row seat to the rapidly changing technology landscape, while also being able to contribute input into what technologies might work in the operating environment. UP.Partners will also act as an adviser and occasionally co-invest with Alaska Star Ventures.

To give a hint at what types of technologies Alaska Star Ventures might fund in the future, Birkett Rakow pointed to the roadmap the airline released alongside its pledge, which established five areas of focus: increasing operational efficiency; evolving the fleet; sustainable aviation fuels (SAF); novel propulsion technology; and credible carbon offsets.

While SAF and propulsion, like batteries or hydrogen fuel cells, tend to garner the most attention — in part because they offer the most promising potential in terms of magnitude at addressing emissions — Birkett Rakow said the new fund will also look at other types of technologies that increase efficiency or cut unnecessary fuel burn.

For example, Alaska Airlines recently partnered with Airspace Intelligence to launch an AI-based system for airplane route optimization, which she said shaved off around five minutes per flight.

“While we didn’t make a financial investment in [Airspace Intelligence], it was a good model for us of how us having access to technology that could make a difference, a significant difference, in our operating performance towards net zero [ … ] really could help this technology be more successful and scale,” she explained.